Binance chief Changpeng Zhao referred to it as “Bloodbath day,” and many in the cryptosphere will echo those sentiments, as fallout from the COVID-19 pandemic reverberates through global markets. As crypto exchanges were thronged by frantic traders looking to capitalize on – or seek refuge from – the unprecedented market dump, several platforms buckled under the pressure.
Exchanges Struggle as Traders Get Busy
A panic-stricken sell-off of bitcoin and other risk-on digital assets has led to a number of crypto exchanges experiencing outages. On Thursday, March 12, Binance’s CZ noted that the platform’s load was 5x greater than all previous peaks. The exchange was handling 146,500 messages per second, with a 30GB/s market data push from a lone source. Aside from the occasional glitch, Zhao says systems appear to be holding up for now. Kraken was also briefly down earlier today.
Over on Bitmex, the Seychelles-based exchange experienced the most liquidations in 16 months: $702 million worth, $698 million of which were longs. The Ethereum network, meanwhile, has been toiling under heavy network congestion, with gas prices spiking to as high as $3.70 today, and transactions waiting hours to be processed. Binance has temporarily increased withdrawal fees for ETH and ERC20 tokens.
Network activity has been driven up by traders seeking to sell their holdings and under-collateralized defi positions being forcibly liquidated. ETH also nosedived by 35%, its most significant one-day decline since 2018. The price of BTC, meanwhile, fell below $6,000 for the first time since May while altcoins also plummeted. Against this wild backdrop, we have a halving on the horizon.
Bitcoin’s Safe Haven Status in Question
The theory that bitcoin might be a safe haven as oil, stocks, equities and bond yields plunge has been disproved: but even gold, widely viewed as the ultimate safe haven asset, dropped by more than 1% on Changpeng Zhao’s aptly-titled Bloodbath Day. Most crypto traders are seeking refuge by switching into stablecoins while knife-catchers have been buying up cheap coins in anticipation of the next rally. Volatility remains a trader’s best friend. As Bitmex’s Arthur Hayes put it, “I know all you HODLers say you love “cheap coins”, but will you really back up the truck if the S&P is flirting with 2,000? We shall see.” He added:
The time to back up the truck is when the futures basis goes flat or negative. That will signal an evaporation of optimism. Then you must surf the tidal wave of free money, and begin buying crypto with both hands. First fill your Bitcoin handbags, then acquire all the other dog shit … even CRipple might pop. Long live volatility, and stay healthy.
To say the economy has experienced turbulence in the wake of coronavirus would be a gross understatement. Assets are in virtual freefall across traditional and crypto markets, with pledges by the Fed and the Bank of England to cut interest rates seeming to have little effect.
Cruise liner and airline stocks have been some of the worst hit, with Boeing’s stock dropping 50% from last year. Numerous flights have been cancelled, and President Trump has announced a travel ban on 26 European countries in an attempt to contain the virus. Italy, one of the worst-hit countries, has come to an eerie standstill, all shops and restaurants except pharmacies and food outlets closed to the public. Many believe their own nations will soon follow suit, as infection spreads at a frightening pace.
Although the short-term outlook for bitcoin remains bearish, and sentiments like “keep calm and HODL” have been doing the rounds on Crypto Twitter, the sense of frenzy is impossible to ignore. As Messari’s Ryan Selkis urged, “It’s ugly today, but this too shall pass. Stay safe. Keep building.”
Where do you see the crypto markets heading from here? Let us know in the comments section below.
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